The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
If inflation persist any drop will be temporary. Property prices go up in inflationary environments. Just look at property prices in the US and the UK in the 70s!
Salaries are going up in terms of currency (even if they are lower in absolute terms) to keep up with inflation.
Let's say inflation is 12% for 10 years and your salary goes up 10% every year. After 10 years your salary will go up from let's say £50,000 to £130,000 (even though yuu'll be poorer). So an average UK property of £300k will go from being 6 times your salary to being 2.3 times. Obviously property prices will go up!
Never mind, I've just found the reason on their website. It's actually been closed for good:
https://www.hotelchocolat.com/uk/restaurants/rabot-london.html
Don't remember seeing an RNS about this? I've eaten there and the food was good but a bit pricey for what it was. So I'm guessing there weren't enough customers unfortunately.
Hopefully they can expand the café/bar upstairs in place of the restaurant, as downstairs was full to bursting yesterday.
I was at the Borough market shop yesterday. Very busy and it really felt like a posher version of Starbucks. Saw a couple on a date, tourists, etc. Really good vibe. I finally tried the summer ice cream milk shakes and the missus had the ice cream in a cone. Both really good and were advertised in front of the shop.
The only disappointment was that I forgot the use my VIP discount!!
Btw the restaurant was "temporarily closed". Any idea why?
Folks, as many of you know I've been riding this down from £40 to about a quid. I bailed at about the £1 level down 60%, unhappy with the lack of action to shore up the balance sheet and cut costs and I'm glad I did. What the board have done is criminal. No RNS as well. I was thinking about getting back in but I've now lost all trust in management. Can't put lipstick on this pig anymore!
Not so long ago I dumped my BOO shares after management moved the goalposts so that they can still get their bonuses despite the share price fall. Total lack of integrity over there and it seems ASOS isn't much better. With the recent sell of in US stocks I can buy much better companies with good management with about the same risk reward. Sorry, but why stick with this dog?
Claire, ASOS having a great year?! The share price is down 70% YTD from the already low 2300. You'd think if a share is down 50% already, it won't fall down that much anymore, but ASOS is a great case study that things can always get worse!
They decided to invest more in the US at exactly the wrong time, plus bought too much inventory. Like Shopify they thought the Covid boost to online will be permanent but instead people have happily returned to shops. This has resulted in massive negative FCF of -144m. Add loads of debt on the balance sheet and high management turnover and I don't call that a good year!
Management (whenever there is someone actually in charge at ASOS) got pretty much every call wrong! They should've used the extra Covid cash to clean up their balance sheet, pay down debt and prepare for things going back to normal. Instead they spent a ton of money on growth, acquisitions and inventory and now the balance sheet looks shaky and they're spending more than they are earning. The bottom has fallen out of the share price as a result. Yes, some of it was the market, inflation, etc. but a lot of it was self inflicted. Other retailers like Next are down only 27% YTD. Amazon is down 24% YTD. Time to take off the rose tinted glasses - ASOS has had a terrible year, and so has my portfolio!
I think it's fair to say that the bounce in share price we were all expecting, didn't materialise. Liquidity has also gone down back to being really low. Whatever games the big boys were playing, it looks like they are done now and relaxing with a pint after the game.
Thanks for the thoughtful comments and a lot of them made good points. There were few that were patronising or outright insulting or showed total lack of understanding. I think some people need to take a long hard look in the mirror before they judge others.
Just to clarify, a personal loan is NOT investing on margin. It has a fixed, low 3% interest rate in the current 10% inflation environment. Total cost would be about £1,700 which I'll get back after just 1 year of TW dividends. The rest is profit, and with 3-4 year horizon the share price will probably be higher. My job is relatively safe, so the risk of not being able to pay is very low. So not even remotely a gamble! Probably quite a safe bet really, especially if diversified across several dividend stocks.
I'm more thinking of this the way Buffett invested in the Japanese companies with borrowed money. But apparently as in was already said, for some reason it's indeed illegal to use a personal loan in the UK to buy shares. But hey, you can invest in art and antiques. Go figure?!
What do you folks think about taking out a personal loan to invest here? I know, I know, never borrow to invest. But one can get a personal loan of £25,000 right now at about 3.2% for 3.5-4 years. That results in a payment of £550-600/month. TW pays 7.88% dividend. So that's a 4.68% return without any potential share price appreciation. Seems like free money, doesn't it?
Excellent discussion on both sides, please keep the good posts coming. Few months ago I raised some of the concerns shared on here more recently.
Why is Free Cash Flow so negative? -143.8m on the negative. I know they were expanding last year when things were looking good but surely they should've shut down the US expansion, etc. long time ago and try to get back to positive FCF.
Earnings are great but when you need to pay down debt, you have less sales, it's cold hard cash that matters! Any stock with negative FCF gets killed in the current market including big fish like Pinterest, for example. Even Amazon took a bad hit. I can't help but feel that a lot of ASOS' problems are entirely self inflicted!
I'm not sure a recession is fully priced in. Was reading yesterday on CNBC about Coinbase going up a lot on meme stocks kicking off again on Reddit. This doesn't sound like capitulation to me. I think it's a bear market rally and will have one more leg down.
So far we've had the speculative, unprofitable stocks go down first, then big tech got hit, I think the next and final leg lower will be the general market getting hit by the recession - the cyclicals like commodity stocks, industrials, and the so called consumer "recession safe" stocks like McDonalds and Coca Cola which are ridiculously expensive right now. Just IMHO but as always macro is quite unpredictable.
Krusty, Paul and I were discussing this about a month ago.
I prefer TW to Persimmon. PSN has a dividend of 13% but a Payout ratio of 96%, i.e. it's unsustainable unless they borrow to pay it which will benefit shareholders only short term. If it get's cut, let's say in half to make it sustainable the share price will tank more than 7%. Probably 10% at least. I've seen that many times, for example with Inmarsat. You lose half your divi and get a hit in the share price, double whammy!
TW's dividend is smaller but sustainable, you get what you pay for!
Cirl, great summary, thanks for sharing! There are few points I disagree with but overall spot on, really.
Econ, what gives you this trust in the CEO? I've hardly seen anything from them. Few short comments in the Retail Gazette when he took the job. Nothing of substance. Like Fireblade said, you'd expect them to make some sort of statement. Hopefully, we get to hear more from him when they announce results. Don't get me wrong, I'm glad he's not all over social media like the Kamanis. But some presence in this day and age is necessary IMO.
Yes £3m worth of stock! Wasn't me though, I bought shares for about £300. My portfolio is missing few zeros.
The BBC ran a report on charging for returns this week. To keep it short consumers get very annoyed with return charges and it attracts bad press. It's even worse for the likes of ASOS because they don't have physical shops where you can return the items for free, if you don't want to pay the return fee. Basically, your living room is the fitting room by default. Returns are part of the business model!
So I think it's a terrible idea, I think BooHoo are making a mistake and ASOS shouldn't be following. It's better to increase prices a little than charge returns.